Member Sign In

You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.

If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.

Overall, it was another dismal week for the sector. West Texas Intermediate (WTI) crude futures dived 5.4% to close at $43.41 per barrel, while natural gas prices ended down 5.3% to $2.619 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: EOG, Apache Wrap Up Q3 Energy Earnings Season .)

Oil prices sank to multi-month lows after reports showed that output by members of the OPEC cartel – whose associate nations supply around 40% of the world's crude – rose to an all-time high in Oct. At 33.64 million barrels a day, current production is way over OPEC’s target to limit volumes to a range of 32.5 million - 33 million barrels a day. Given the recent data sets, investors have started doubting whether OPEC will be able to rein in production as part of the plan reached in Sep.

Adding to the pessimism was the U.S. Energy Department's weekly inventory release, which showed a dramatic increase in domestic crude production.

Meanwhile, natural gas also turned sharply lower following a larger-than-anticipated inventory build that pushed the commodity’s storage level to a new all-time high. The commodity was further hampered by a warmer-than-normal weather that translates into weak demand for the heating fuel.

Recap of the Week’s Most Important Stories

1. Europe’s largest oil company Royal Dutch Shell plc recently announced its plan to invest $10 billion in Brazil over a span of five years. The company intends to tap into the increased opportunities for foreign companies in the Brazilian oil industry with this move. Shell currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

Shell – the largest foreign investor in Brazil – plans to continue investing heavily in the country in order to double its global deep water production by the early 2020s. Shell plans to invest around $2 billion every year and it intends to fund the investment from the more than $30 billion in capital that it has already deployed in Brazil.

Following regulatory changes in Brazil, Shell seeks to expand its ultra deepwater oil exploration and production holdings in the country. Notably, the company already operates 5,500 energy stations in the nation and has acquired a large number of oil and gas assets via its takeover of BG Group this year. (Read more: Shell Announces Plan to Invest $10 Billion in Brazil .)

2. Chevron Corp., the second-largest U.S. oil producer, recently reported that it has started production at the Mafumeira Sul oil field along with Angolan state oil major – Sonangol. The initial production capacity of the field is 10,000 barrels per day.

The Mafumeira Sul oil field is estimated to produce 110,000 barrels per day or more, once fully developed. Located off the coast of Angola, the project is worth $5.6 billion and currently uses early production systems or EPS to produce 10,000 barrels of oil per day.

3. U.S. independent ConocoPhillips (NYSE:(COP - Free Report) – Free Report) recently announced plans to commence a multi-billion-dollar divestment program next year in order to survive price volatility.

The company intends to sell assets valued between $5 billion and $8 billion, mainly from its North American natural gas portfolio. Given that Brent crude is now trading at about $50 per barrel, these activities will facilitate the company to accomplish its priorities like a debt level of $20 billion, a 20–30% payout of operating cash flows to shareholders as well as modest production growth to drive margin and cash flow expansion. According to the strategy for 2017, ConocoPhillips will announce a $3 billion share repurchase program.

Moreover, the company is expected to further trim its capital expenditures and costs in 2017 from the levels in 2016. Nonetheless, it will target a modest growth in production. ConocoPhillips now expects capex of about $5 billion next year, down 4% from the current year’s guidance of $5.2 billion. This also indicates more than 50% decrease from the 2015 capex and investments of $10.1 billion. (Read more: ConocoPhillips Plans Divestments Worth $8 Billion in 2017 .)

Per a statement, Permian Express Partners – the new JV – will comprise assets owned by both companies. Sunoco Logistics will be the majority owner and operator of the JV assets with a stake of 85%, while ExxonMobil will hold the remaining 15%.

Sunoco Logistics will contribute its Permian Express 1, Permian Express 2 and Permian Longview and Louisiana Access pipelines to the JV. ExxonMobil, on the other hand, will contribute a Texas-Louisiana pipeline as well as its Pegasus pipeline, which runs from Texas to Illinois. (Read more: Exxon & Sunoco Logistics to Merge Midstream Assets, Form JV .)

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Resources

Client Support

Follow Us

Zacks Research is Reported On:

Yahoo

MSN

Marketwatch

Nasdaq

Forbes

Investors.com

Morningstar

Copyright 2017 Zacks Investment Research

At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +25% per year. These returns cover a period from 1988-2016. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zack Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations.

Visit performance for information about the performance numbers displayed above.